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Legal insights & industry updates

| 1 minute read

Taxpayers urged to make full use of this year's allowances with time running out

Taxpayers have less than one month to make full use this of year's Inheritance Tax (IHT) and Capital Gains Tax (CGT) allowances with the 5 April deadline on the horizon.  

The current IHT threshold has stagnated since 2009 and with the Chancellor’s Autumn Budget announcement of a freeze to the IHT threshold at current levels for the next five years, this is only likely to continue. 

In the same Budget, the Chancellor also froze the CGT allowance until 2025/26 at the earliest. As house prices and share values rise, the result will be more people "caught" by thresholds that have failed to keep pace thereby netting the Treasury more and more funds with each passing year.

Despite calls by The Office of Tax Simplification recommending urgent review, it seems reform could still be a long way off. 

With careful lifetime planning it is possible to mitigate the tax which may become due on your estate.

As a starting point it is important to make a Will to ensure that your estate goes to the person, or people, you want to receive it. It also allows a person with a large estate to engage in IHT planning to manage the tax bill. Even if you have already prepared a Will, it is worth reviewing it to ensure you make the most of the tax allowances available; and don't get caught out by missing the deadline!

Both taxes are becoming more lucrative for HM Revenue & Customs. HMRC collected a record-breaking £6 billion in 2021, up £600 million on the previous year. In 2020/21, the taxman took a staggering £10.61 billion from CGT, up £800 million on the previous tax year.

Tags

family law, private client